Appraising in the real estate field is the act of valuing a real estate property by the estimate of a qualified person. This helps in establishing the price a property would fetch it was offered in the free market economy. This greatly helps the person who is possession of the property. An appraiser is the person who apprises the property. They are licensed by the state after they have achieved the required qualifications. The property in consideration for appraisal is called the subject property.
The appraiser has to be a very objective third party. They must be having no financial benefits from the property or any other kind of ties. An appraisal is important to a lender who is lending money to the individual who owns the property. The owner uses the appraisal as a security to obtain a loan from money lenders. Lenders are guided by the amount stated in the appraisal to know the amount that they will lend to the borrower.
In the appraisal, there are details about the subject property and also comparisons other similar properties currently in the market. It also has details about the current market conditions in such properties. It gives more information on the neighborhood where this subject property is located. These details are like stating the level of development of this region and also the kind of neighborhood around. The appraisal states also the time the property would stay in the market when it comes to the time of selling it.
The two most popular methods used in property appraisal are sales comparison approach method and cost approach method. In sales comparison, the appraiser is guided by comparing the costs at which other similar properties have sold at in the neighboring areas. These other similar properties are referred to as comparables. The cost approach method works well mostly to new properties.
The reason for this is that all costs involved in putting up the structure are known at the time when the property is newly constructed. Here, the estimated value of the subject property becomes the amount at which it costs to build the whole the property from the beginning to the finishing.
Sometimes the appraisal might be low but the one should not worry since they are given certain procedures to follow in order to step up the appraisal.
If there are some problematic situations discovered during the time of appraisal, they can be easily fixed also. Hence, one should never shy away from carrying out an appraisal for their residential property because there is nothing that lowers the appraisal that cannot be improved.